The More Things Change

To commission or not to commission

When a customer adds or upgrades a pool or spa after the contract has been signed, it can raise a somewhat touchy question: Who gets the commission?
Different builders have different answers.
Offering commission to a superintendent can incentivize him or her to try to upsell as construction progresses. “If the superintendent says ‘Hey, did you give any consideration to maybe upgrading your lights to LED?’ and the customer says yes, then the super can make a commission and it brings more money in the company,” says Kevin Rondeau, president of Phoenix-based Rondo Pools.
This also motivates superintendents to make sure they collect for that change, adds Ron Robertson, president of Robertson Pools & Spas in Coppell, Texas. “They don’t get paid for it unless they get it collected and the paperwork is correct,” he says. “It’s kind of a win-win for them and for us.”
For others, it makes more sense to keep commissions with the salesperson. Michael Moore will do this if the change will add at least a few thousand dollars to the project or it requires redrawing on the salesperson’s part. “If they’re not involved, we don’t pay a commission,” says Moore, a design consultant with Morehead Pools in Shreveport, La.
Moore chooses not to pay commissions to field superintendents because they are not design experts. “I don’t want [a designer’s] comprehension of rhythm, space and balance to be superseded by [a super’s] hunger to add 1,000 square feet of decking on a job,” he says.

— Rebecca Robledo

What do builders say?

Michael Moore
Vice president of sales and marketing
Morehead Pools
Shreveport, La.
Sometimes we write a change order and the customer doesn’t understand it. Maybe we’ve got concrete in the driveway ready to pour deck, but they’ve added 100 feet because they thought that the deck went all the way to this point. They might say, “I remember it vividly. I don’t have a copy of the drawing, but I remember it.” We have concrete in the driveway, so what are we going to do, just let it ruin? No. Maybe we don’t want to raise a big stink. In that case, we’ll document what the change is and the value of that change order, but it says we’re going to no-charge that for customer relations. So we document it, have them sign it, but we don’t charge them. And we explain to them, “We’re doing this for you.” I was told one time that if I’m going to lose money on my end, I don’t want to lose twice on the referral end. My grandfather told my dad, “I could lose once or I could lose twice. I’d rather just lose once.’”

Doug Staples
President
Cimarron Circle
Construction Co.
Tucson, Ariz.
Every time you have to stop, write something up and get hold of a subcontractor or one of your own people and change your schedule, it costs you money. At one point, we even thought of saying, “If you have a change after we start the job, it’s going to cost you the change plus $200 for administration.” But customers want to feel that you have a rapport and they don’t want to get dinged because they make changes. So we didn’t implement that.

Kevin Rondeau
President
Rondo Pools and Spas
Phoenix
The toughest is when people want to change the shape, size or location of the pool while it’s in process. If the customer says “I want to move the pool 3 feet to the left and I want to make it 2 feet longer,” it entails repermitting, redrafting and re-engineering. That’s the biggest thing we try to avoid. So we have a form that the customer signs, saying “We approve the shape and location, and if we make any changes after this point there’s a $500 processing fee, because it will take repermitting the job in a new location.”

Ron Robertson
President
Robertson Pools & Spas
Coppell, Texas
My superintendents have a retail price amount for everything, whether it’s extra decking or adding a salt system or a change in the interior surface. They either have that information on their laptops or we make it available to them so they can process a change order just about any time.

Change is good. At least that’s what clients seem to think today.

“The number of changes that happen during any individual job are huge, and I’ve been in this business for 45 years,” says Doug Staples, president of Cimarron Circle Construction Co. in Tucson, Ariz. “In the past four or five years, [change orders] are increasing by leaps and bounds.

“We have a staff meeting every week that takes about an hour and a half, and we go over every single job. One of the reasons it takes so long is because of the changes.”

Builders welcome these changes. Having a happier customer can only be a good thing, and these adjustments generally mean the project carries a higher price.

But this does bring inherent challenges. Customers must understand how midstream changes will affect the project. Subcontractors or crews must be made aware of the adjustments, as should salespeople, designers and those in charge of billing and ordering materials.

“You have all these addenda flying around, and it gets confusing, and you have to really track it, so it does become a problem,” says Ron Robertson, president of Robertson Pools & Spas in Coppell, Texas.

Here, builders share their strategies for making change orders go as smoothly as possible.

1. Don’t allow changes until paperwork has been signed

Customers don’t always understand the cost or effort that’s involved in building a pool and often view a change as simple. They may not know that, if it’s the day before plaster and they decide to switch to a material that takes several days to obtain, not only must the new finish be ordered, but the job also needs to be rescheduled.

To make sure customers know the impact of their alterations, builders should always have a written addendum outlining the exact change, how much it will affect the contract price, and how it will alter the timetable. Some changes can’t be priced out exactly and must be performed on a time-and-materials basis. If that’s the case, Staples tries to indicate the maximum the change will cost.

Additionally, the change order should stipulate when that extra money will be collected.

“We turn over the form and get the [change] approved before ordering the part or doing the work,” says Jordan Clarkson, vice president and general manager of Pools by John Clarkson in Jacksonville, Fla. “We have to make sure the homeowner knows the cost and we’re clear about what the exact change is before we do the work. That can happen in an hour or it can take weeks. It depends on what the change is.”

At some point, customers need to find out about the change order or addendum process. Morehead Pools acclimates its clients as soon as possible, by writing up addenda even for materials choices that hadn’t been made yet at the time of the contract.

“Even tile selection we consider a change order,” says Michael Moore, a design consultant with Morehead Pools in Shreveport, La. “If they don’t select it upon contract, we do an addendum or change order. It’s a no-charge selection and it conditions the client to the process. It actually didn’t cost anything but, they understand the process of change orders.”

2. Set up a system for handling the requests

These builders set in place a consistent procedure for handling change orders. The key is putting the same people in charge every time – one or two to work with the customers and another to handle the administrative portion.

These builders have the superintendent or the salesperson (or both) take the order and help the customers make their choices to alter the plans and agree on the price. For some, the salesperson makes sense, since they have been the main connection for the customer, there has been a trust built.

For others, like Phoenix-based Rondo Pools, it makes most sense for the superintendent to be in charge. Being closest to the project once ground breaks, supers will know best how any change will affect other aspects of the job, says Kevin Rondeau, president of the firm.

“We’ve had issues where our salespeople or designers are pulled in to make a change, and they’re not aware of other things that may be impacted by those changes on the construction level,” he says. “As an example, a customer changes from a standard plaster interior and says, ‘I want to switch to pebble,’ and they pick a gray color. Meanwhile we’ve already installed white interior heads for the in-floor cleaning system, so now we have the wrong color heads in the floor.”

Other times, a customer may want to change from a poured concrete deck to travertine – after the grading has been finished. If the elevations don’t allow for the new deck choice, the super can make that determination and explain the situation.

At least as important, these builders assign an office staffer to process the forms, update the client’s file, send out invoices and order the needed materials. For Moore’s company, it’s their operations manager, while Staples has his contract administrator handle this function.

“Depending on what the change is, the superintendent carries change orders with him in his truck, so if he can determine what the price is for the change, then he can go ahead and get the customer to sign,” Staples says. “More times than not, though, the salesperson has to get involved because it’s a dollar and cents item. The superintendent will go back to the salesman and say, ‘Okay, Mrs. Jones wants 100 square feet more deck.’ The salesman then would come up with the price, hand it to the contract administrator, and then it would get sent out to the client to be signed prior to the work being done.”

3. Make sure everyone knows who the point person is.

Sometimes homeowners will ask subcontractors or in-house crews to make a change – say, extend the concrete decking a few extra feet – while they’re in the backyard doing the work.

For this reason, builders should make sure customers know whom to tell if they’ve decided to adjust some aspect of their pool. Staples’ company does this after the contract has been signed and before construction.

“The superintendent and the salesman go out and do what we call a hand-off,” Staples says. “The salesman gives the super all the information that he needs to build the job, and the superintendent then talks to the client and says, ‘If you have anything to change, anything whatsoever, talk to me, because I am now responsible for getting your pool built. Don’t talk to anybody else.’”

But sometimes when customers approach crews directly, they may actually be trying to get the work completed under the radar. “Believe me, it’s been tried,” Robertson says. “A homeowner would go out there and say, ‘Hey, would you go ahead and add 3 more feet of deck on this side for me? I’ll give you a couple hundred bucks.’ We’ve had that happen many times.”

To prevent this, some builders forbid their crews from making a change without going through the proper channels. If subcontractors are involved, they might make it a condition of getting paid that any change orders must be approved by the builder first.

“In our subcontractor agreement, one of the line items says that any changes made without Morehead Pools’ supervision or authorization will cost them,” Moore says. “The homeowner just got that for free, and the subcontractor is not going to get paid for that extra [work].” In addition, the builder may not work with the subcontractor in the future.